China reclaims its position as largest foreign holder of US Treasuries

China displaced Japan and reclaimed its position of largest foreign holder of US Treasuries after increasing its holdings for five consecutive months, according to data released on Tuesday by the US Department of the Treasury.

The country's total holdings of US bonds, notes and bills in June rose to 1.15 trillion US dollars after it bought 44.3 billion US dollars of Treasuries that month.

Japan, which had overtaken China on the top spot since last October, sold 20.5 billion US dollars of Treasuries and took its total holdings to 1.09 trillion US dollars in the same month.

The two countries account for over a third of the total foreign ownership of US Treasuries, the figures showed.

China's demand for US Treasuries was driven by strong trade flows between China and the US, and the country's holdings will probably keep growing in future months, according to Thomas Simons, a senior economist at Jefferies LLC in New York.

"I don’t think China’s done buying, given their trade balance with the US," Simons said. “The trade flows are going to create more demand for Treasuries.”

China's foreign exchange reserves rose to 3.08 trillion US dollars in July with increase for sixth straight month, the country's central bank announced earlier this month.

(CGTN)